Charitable giving: Uncovering hidden benefits

| Print |  Email
Monday, May 01, 2006

by Greg Chaillé, president, Oregon Community Foundation

Whether your business has an established plan for charitable giving or is just getting started, it is important to know how much of the philanthropic contributions your business makes can be deducted for tax purposes.

It can be daunting to navigate the complex tax structure for charitable giving. For instance, because the IRS treats business expenses differently from charitable contributions, it is essential that you are precise about the deductions you claim.

The following information applicable to Oregon businesses is based on contributions made to 501(c)(3) corporations and does not cover all types of charitable giving.

Business Structure Who Receives Deduction Allowable Deduction
C corporation Corporation Up to 10% of a business’s pre-tax profit in the year of the donations. Contributions over 10% can be carried over for five years.
S corporation Individual owner(s) Up to 50% an of individual’s adjusted gross income in the year of the donations. There is usually a five-year carryover.
Partnership Individual owners Up to 50% of an individual’s adjusted gross income in the year of the donations. There is usually a five-year carryover.
Sole proprietorship Individual owner Up to 50% of an individual’s adjusted gross income in the year of the donations. There is usually a five-year carryover.


The next chart summarizes IRS regulations for deductions. For greater detail on the regulations that are specifically applicable to Oregon and your organization or business, you must consult your tax adviser.

Type of contribution Charitable deductions Business expenses
Direct cash donation Yes. However, if you receive any benefit in return, you must subtract the value of that benefit from the amount of your deduction. No.
Cash given to employees to donate to charities of their choice Yes. No.
Sponsorship Yes, if not directly related to business. Yes, if directly related to business.
Purchase of ad in nonprofit publication Yes, if you don’t expect to earn at least the cost of the ad as a result of its publication. Yes, if you expect to earn at least the cost of the ad as a result of its publication.
In-kind gifts of products Yes, for the value of your costs, not market value. However, inventory donations by C corporations to benefit the ill, the needy or infants, and gifts of scientific equipment used for research may be eligible for higher-value deductions. No. Be sure not to deduct your costs as both a business expense and a charitable contribution.
Depreciable property Yes. Fair market value less prior depreciation. No.
Stock Yes, of both C and S corporations. Deductions can be made for fair market value if held by the donor for more than one year. No.


— Greg Chaillé, president, Oregon Community Foundation, www.ocfl.org.
The Oregon Community Foundation offers advice on the tax benefits of setting up a business or family foundation and provides guidance for charitable giving.
 

More Articles

Downtown flower shop readies for the Valentine's Day rush

The Latest
Monday, February 09, 2015
021015-giffords-thumbBY MEGHAN NOLT

VIDEO: Gifford's Flowers brings family approach to PSU-area shop.


Read more...

Editor's Letter: Tortoise and the Hare

February 2015
Monday, January 26, 2015

The day after this issue goes to press, the city of Medford will host its annual business conference. The event features Minoli Ratnatunga, co-author of the Milken Institute’s annual “Best-Performing Cities” report. Preliminary data suggests that Medford is likely to retain its No. 1 ranking among best-performing small cities for having a higher concentration of high-tech firms than the national average. 


Read more...

That's Not a Watch (This Is a Watch)

February 2015
Tuesday, January 27, 2015

Smartwatches are all the rage. But old-fashioned timepieces keep on ticking.


Read more...

7 industry trends of 2015

The Latest
Friday, January 09, 2015
covertrends15-thumbBY JACOB PALMER | OB DIGITAL NEWS EDITOR

Industry groups identify top trends for 2015.


Read more...

Nuclear fingerprints

March 2015
Tuesday, February 24, 2015
BY LINDA BAKER | OB EDITOR

At Oregon State University, a 21st century version of the bad dream — nuclear terrorism — is alive and well. This winter, the Department of Nuclear Physics and Radiation Health Physics created a new interdisciplinary graduate emphasis in nuclear forensics, a Sherlock Holmes-sounding program that aims to identify how and where confiscated nuclear and radiological materials were created.


Read more...

Money Talks

March 2015
Saturday, February 21, 2015
BY LINDA BAKER | OB DIGITAL NEWS EDITOR

Will community banks survive the digital age? Three CEOs peer into banking's crystal ball.


Read more...

100 Best: The Power of the Worker

March 2015
Wednesday, February 25, 2015
BY KIM MOORE | OB RESEARCH EDITOR
AND AMY MILSHTEIN | OB CONTRIBUTOR

Technology is empowering people like never before and transforming how employees interact in the workplace. How can companies attract and keep staff engaged in this rapidly changing world?


Read more...
Oregon Business magazinetitle-sponsored-links-02
SPONSORED LINKS